TRIAL LOOMS FOR HOME STATE'S WARNER

Ohio prosecutors, who won a promise of cooperation this week from a second key criminal defendant in the failure of ESM Government Securities Inc., appear to be preparing for a courtroom battle with defendant Marvin Warner, some attorneys said Friday.

ESM, which collapsed owing more than $300 million a year ago, was based in Fort Lauderdale. But its biggest creditor -- Warner's Home State Savings Bank -- was headquartered in Cincinnati.

An Ohio grand jury has been investigating the ESM matter, because the related closing of Home State triggered the biggest run on financial institutions since the Great Depression.

The grand jury has returned indictments against several executives associated with ESM and Home State.

Ron Ewton, former ESM chairman, Wednesday pleaded guilty in Cincinnati Wednesday to several charges related to ESM. Lawrence Kane, the Ohio special prosecutor, recommended Ewton be sentenced to seven years in prison but suggested dropping 47 of the 56 charges against Ewton.

Ewton and Jose Gomez, the ESM auditor who pleaded guilty earlier, agreed to cooperate with prosecutors.

"The Ewton plea is a very significant development in the case, as was the plea of Jose Gomez," said Ohio special prosecutor Lawrence Kane.

Asked if resources were being marshaled for an anticipated jury trial of Warner, Kane said, "That would be your characterization."

Fred Gettis, a Cincinnati defense attorney for Warner, said however that prosecutors have not approached Warner about entering a guilty plea. Nor has the defense discussed that possibility, he said.

It appears that Warner's guilt or innocence will be determined by a jury at the end of an eight- to 12-week trial, Gettis said.

Meanwhile, the Ohio grand jury has reconvened. "Their work is on a new phase," Kane said. "We do expect other defendants and possibly new defendants that will come within the ambit of the investigation."

Bankruptcy trustee C. Thomas Tew of Miami is trying to complete a proposed agreement that would allow distribution of about $35 million or 22 cents on the dollar to ESM customers, attorneys said.

Negotiations are "very definitely going forward," said Charles W. Burson, an attorney for another creditor, the Memphis school system.

Last month, Fidata Trust Company New York, which cleared securities transactions for ESM, was sold to the Bank of New York for $33 million plus $10 million in notes.